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Glossary of terms

Glossary

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A

Active Management
A style of investment management where the fund manager aims to outperform a benchmark. Active managers rely on research, market forecasts, and their own judgement and experience in an attempt to achieve this. Compare with Passive Management.
Alpha
A fund’s alpha is its outperformance relative to a benchmark/index.
Altcoin or Alternative Coin
Any digital currency other than the first cryptocurrency, Bitcoin.
Arbitrage
The act of exploiting price differentials in the same securities or related assets, whereby the securities are bought on the market offering a lower price and sold on the market offering a higher price.

B

Basis Point
One hundredth of 1% (i.e. 0.01%). Also referred to as bps or “bips”.
Bear Market
The opposite of a bull market and implies the market is downward trending.
Beta
A fund’s beta is its return relative to a benchmark. A fund with a beta of 1 moves up and down the same amount as the benchmark. Most ETFs are ‘beta’ funds, as they are designed to track the return of an index as closely as possible.
Benchmark
An index against which an investment fund’s performance is measured. Also called performance benchmark or reference index.
Bitcoin
The original cryptocurrency that also has the highest value market capitalization. It was pioneered by its creator Satoshi Nakamoto as a peer-to-peer electronic cash system.
BitLicense
Refers to the business license issued by the New York State Department of Financial Services (NYSDFS) to companies dealing with cryptocurrencies (subject to certain exceptions) in New York.
Block
In the context of blockchain, it refers to the collection of transactional data or information that is bundled together.
Blockchain
A decentralized public ledger containing transactional information. In its simplest form, it’s a list of transactions that anyone can view and verify. For example, the Bitcoin blockchain contains a list of every time someone sent or received a Bitcoin.
BRR (Bitcoin Reference Rate)
The daily reference rate of the US dollar price of one bitcoin at 4pm, London time. Each day, the BRR aggregates the trade flow of major bitcoin spot exchanges during a specific one-hour calculation window. This one-hour window is then partitioned into 12, five-minute intervals, where the BRR is calculated as the equally-weighted average of the volume-weighted medians of all 12 partitions.
Bull Market
The opposite of a bear market and indicates the market is upward trending.
Burned Tokens
Tokens which have been sent to addresses whose private keys are not known. Thus, they effectively become unusable.
Burning Coins
Some cryptocurrencies ensure that the token supply always equals their financial backing. The process of burning coins takes place when cryptocurrencies are taken out of circulation to maintain this balance.
Buy / Sell Tax
Buy or sell tax rate where a percentage of the tokens bought or sold are transferred to a set address.
Buy Wall
An unusually large buy order(s) at a single price that reflects as a ‘wall‘ in the order book.

C

CeFi (Centralized Finance)
The opposite of DeFi (Decentralized Finance). The underlying principle is to create crypto investment opportunities that offers some of the yield benefits of DeFi with some of the benefits of traditional financial services products (TradFi). With CeFi, market participants can borrow money, buy and sell crypto, and spend and earn rewards with a crypto debit card, etc.
Central Bank Digital Currency (CBDC)
A digital fiat currency issued by central banks. This contrasts with cryptocurrencies that are issued by non-legislative authorities.
CF Benchmarks
The world’s leading regulated digital asset benchmark administrator. The company’s indices underpin the most successful regulated financial products in the cryptocurrency space and are increasingly used by the most forward-thinking service providers in the crypto economy.
CF DACS (Digital Asset Classification Structure)
CF Benchmarks has created the CF Digital Asset Classification Structure (DACS) to help investors in digital assets understand the blockchain economy and formulate their investment portfolios. It’s a multi-level system for classifying digital assets by their functional purpose.
CFTC (Commodities Futures Trading Commission)
The main regulator for derivatives in the US who have determined that legally, digital or cryptocurrencies are commodities. Thus, they have jurisdiction to oversee derivatives contracts that include cryptocurrencies.
Circulating Supply
An approximation of the number of coins or tokens that are currently not locked and are available for trading by investors
Closed-End Fund
An investment fund with fixed capital. The shares of a closed-end fund can be bought and sold on a stock exchange but no new shares will be created and no new money will flow into the fund. Compare to Open-End Fund.
Cold Storage
Storing cryptocurrencies offline on a computer in a vault.
Cold Wallet
A cryptocurrency wallet that’s always offline and not connected to the internet. In contrast to this, a Hot Wallet is always online and connected to the internet.
Crypto Exchange
A marketplace for buying and selling cryptocurrencies.
Crypto Wallet
Stores private keys (passwords) providing access to cryptocurrencies in a safe and secure way. They allow investors to send, receive and spend cryptocurrencies.
Cryptocurrency
A decentralized digital money designed to be used over the internet that utilizes cryptographic protocols to record ownership and prevent counterfeiting. Includes Bitcoins, Ethereum and other crypto coins residing on different blockchains. Importantly, cryptocurrencies enable the transfer of value online without the need for a middleman like a bank or payment processor.
Cryptocurrency Act of 2020
The Cryptocurrency Act of 2020 is a US bill which aims to clarify which federal agencies regulate different types of crypto assets.
Cryptography
The sending of secure, encrypted messages between two or more parties. It allows digital currency transactions to be carried out securely and anonymously without the need for an intermediary such as a bank.
Custodian/Custody
The administration of securities by a financial institution (the custodian). The custodian acts as a primary record keeper of a client’s investments and collects income and processes tax reclaims among various other services.

D

Decentralized Applications (dApps)
A computer application running on a decentralised finance network such as a distributed ledger like a blockchain.
DeFi (Decentralized Finance)
A general term for decentralized financial applications that have no central authority or censorship.
Degen
Trading in cryptocurrencies without carrying out due diligence or research. It might be considered as a form of gambling.
Derivatives
A financial instrument which derives its value from the performance of an underlying asset or index, eg, cryptocurrencies, gold or crude oil.
DEX (Decentralized Exchange)
A peer-to-peer marketplace where cryptocurrency transactions take place directly between investors.
Distributed Ledger
A public register of transactions shared and replicated by a network of computers. They work collaboratively to verify transactions and create an immutable ledger, eliminating the need for a central authority. They are like blockchains, but don’t require the data to be stored in blocks.
Double Spending
The act of spending digital currencies twice. Most frequently applies to the dishonest modification of the blockchain..
dPOS (Delegated Proof-of-Stake)
A consensus mechanism where selected members of a network are voted as delegates to validate transactions and produce blocks on a blockchain.
Dusting Attack
A new form of unscrupulous activity in which hackers and scammers attempt to undermine the privacy of cryptocurrency users by sending small amounts of money to their wallets.

E

EEA (Enterprise Ethereum Alliance)
Established for a group of Ethereum developers, corporations and also start-ups that are collaborating to find ways to use Ethereum for business applications.
EIP (Ethereum Improvement Proposal)
Improvement proposals for Ethereum, used to introduce features or any updates on the Ethereum network.
Emission
The rate at which new coins are minted and released as dictated by the agreed protocols.
ENS (Ethereum Name Service)
A look-up service that allows Ethereum users to find applications or send and receive funds via simple names.
EOA (Externally Owned Accounts)
Accounts that are controlled by a private key and have no smart contracts associated with them.
ERC-1155
A token standard that enables the efficient transfer of fungible and non-fungible tokens (NFTs) in a single transaction.
ERC-20
A standard used for creating and issuing smart contracts on the Ethereum blockchain.
ERC-721
One of the most widely used token standards in Ethereum to create NFTs (Non-Fungible Tokens) via smart contracts.
ETF (Exchange Traded Fund)
Similar to mutual funds, ETFs are a type of pooled investment security that tracks a collection of assets such as stocks, bonds, commodities, or cryptocurrencies. They will typically track a particular index but can be structured to track anything from an individual asset to a diverse basket of securities. ETFs enable investors to buy a portfolio or index in the form of units that are traded on a stock exchange.
Ether
The second largest cryptocurrency coin and the token related to the Ethereum network.
Ethereum
Launched in 2015, it’s the second largest cryptocurrency by market capitalization after Bitcoin. It was created as a global, decentralized computing platform that extends the security and openness of blockchains to a vast range of applications.
EVM (Ethereum Virtual Machine)
The Ethereum Virtual Machine is the software platform that developers can use to create decentralized applications (DApps) on Ethereum. This virtual machine is where all Ethereum accounts and smart contracts live.
Expense Ratio
The ratio between a fund’s operating expenses for the year and the average value of its net assets.

F

Flappening
A term used to describe Litecoin growing bigger and becoming more valuable than Bitcoin Cash (BCH). It originated from the term Flippening used when the value of another crypto overtakes Bitcoin.
Flippening
A hypothetical event in which the market capitalization of Ethereum will exceed that of Bitcoin.
Fork
Occurs when a cryptocurrency community makes a change to a blockchain’s protocol or basic set of rules. When this happens, the chain splits and a second blockchain is created. This new chain shares the history of the original but diverts in a new direction.
Futures
Futures are derivative contracts that obligate parties to buy or sell an asset at a predetermined future date and price. The buyer must purchase, or the seller must sell the asset at the set price, regardless of the current market price at the expiration date. Exchange-traded futures contracts have standard terms, and are subject to daily margining.

G

Gas
A unit of measurement of the computational effort in conducting transactions or smart contracts on the Ethereum blockchain.
Gas Limit
The maximum amount a gas user is willing to spend on a transaction on the Ethereum blockchain.
Gas Price
The price a gas user pays for a transaction.
Goblin Town
A term used to describe the market’s persistent downward trend. It’s very similar to a bear market.
Golden Cross
A bullish breakout pattern from a candlestick pattern. It’s formed from a crossover involving a security’s short-term moving average such as the 15-day moving average that breaks above its long-term moving average such as the 50-day moving average, or resistance level.
Governance Token
Gives people the right to participate in the governance and administration of the network
Gwei
The monetary domination of gas involving Ether.

H

Hard Fork
It is a permanent divergence of a blockchain into two blockchains when the original blockchain does not recognize the new version.
Hashgraph
A distributed ledger system that some consider to be a continuation or successor to blockchain.
Hashrate
A measure of the total computational power being used by a proof-of-work cryptocurrency network to process transactions in a blockchain.
HODL
A common piece of crypto slang. It refers to buying and holding a cryptocurrency for the longer-term, irrespective of events in the market.
Hot Wallet
A cryptocurrency wallet that’s always connected to the internet. In contrast to this, a Cold Wallet is always offline and not connected to the internet.

I

ICO (Initial Coin Offering)
The equivalent of an IPO (Initial Public Offering) where a company / cryptocurrency venture raises funds.
IEO
IEO (Initial Exchange Offering) is a spin-off of an ICO (Initial Coin Offering) where the sale of tokens are conducted on an exchange rather than by the coin team themselves.
Immutable
A property characterized by the inability to change and stays unchanged over time.
Impermanent Loss
The loss caused by price divergence between token pairs provided by liquidity providers versus holding the tokens outright.
iNAV
Indicative Net Asset Value is an indication of the intra-day price of an ETF. It is calculated by summing the last available price of the securities within the fund, and subtracting liabilities. This represents the “Total Value” of the fund, which can be converted into “per share” by dividing the “Total Value” by the number of shares issued. Note that the iNAV is not the price at which the ETF can be purchased.
Index
An indicator of performance on one or more markets. Indices make it possible to view and compare the performance of specific markets. Best known stock market indices include the Dow Jones Industrial Average and the S&P 500.
IoT (Internet of Things)
A system that lets any devices connected to the internet to communicate with each other without human-to-human or human-to-devices interactions.
IPFS (The InterPlanetary File System)
A peer-to-peer network and distributed file system protocol for storing and transferring data.
IPO (Initial Public Offering)
Refers to the process where a public company offers newly issued shares to the public and thus raise capital from public investors.

K

KYC (Know Your Customer)
A process for business entities are required to verify its clients and assessing them.

L

Ledger
A record of financial transactions that cannot be changed, only appended with new transactions.
Leverage
An investment strategy to gain potential return of the investment by borrowing the money.
Lightning Network
It is the second layer or an off-chain of payment protocol that operates on top of a Bitcoin. Payments on this network do not need block confirmation will take place instantaneously.
Limit Order / Limit Buy / Limit Sell
Orders placed by traders to buy or sell a cryptocurrency when a certain price is reached
Liquidity Pool
A core feature of decentralized trading where market participants don’t trade on an order book. Instead, they trade against a common pool of funds residing in smart contracts.

M

Mainnet
It is the main network of a cryptocurrency where the transactions are registered and take place.
Management Fee
The charge levied by the fund management company for the administration and management of the investment fund. The fee is expressed in percentage of the fund assets or in basis points.
Margin Call
Takes place when the investors margin account falls below the required amount to stay liquid. It is usually an indicator that one or more of the assets held in the margin account has decreased in value.
Margin Capitalization (Market Cap)
In the context of cryptocurrencies this is measured by multiplying the circulating supply of tokens or currency by its current price.
Margin Trading
In the context of cryptocurrencies, it’s a way of investing by borrowing money from an exchange or trading platform.
Market Order / Market Buy / Market Sell
A buy or sell order of cryptocurrencies or stocks at the best price available in the current market as soon as possible.
Masternodes
Computers that are responsible for processing blockchain transactions and receive a reward when a block is mined.
mBTC (MicroBitcoin)
One millionth of a bitcoin or 0.000001 of a Bitcoin.
Memecoin
DOGE (Dogecoin) is the first memecoin and is essentially a cryptocurrency based on a meme. In 2021 when the value of Dogecoin rapidly increased in value, other coins with quirky names came into existence.
Mempool (Memory Pool)
Set of unconfirmed transactions in a blockchain.
Metaverse
A virtual space where participants interact with each other in a computer-generated environment. In finance terms, it offers new opportunities to investors by allowing them to purchase cryptocurrency tokens or metaverse coins that could potentially increase in value and earn them a stake in the platform’s operations
Microtransaction
A system that made very small payments possible in buying common digital goods and services such as purchasing items in a game.
Mineable
A cryptocurrency is said to be mineable when it has the system through which miners can be rewarded with newly-created cryptocurrencies.
Miners
Contributors to a blockchain taking part in the process of mining.
Mining
The process where large networks of specialized computers generate and release new cryptocurrency coins and verify new transactions within the blockchain.
Mining Contract
An alternative for cloud mining where users can rent or invest in mining capacity online.
Mining Pool
Combination of resources of several miners to obtain increased mining power and thus achieve greater or more consistent rewards for the opening of blocks.
Mining Reward
The reward resulting from contributing computing resources to process transactions.
Mining Rig
A dedicated hardware for mining cryptocurrencies.
Moon or To the Moon
A slang term for when the value of a cryptocurrency experiences a rapid increase in value. When this happens, the coin is said to be ’mooning’.
Multisig (multi-signature)
They are wallets that require more than one private key (password) for transactions to be authorized.
Mutual Fund
A pooled investment vehicle made up of the collective funds of many investors to invest in securities such as stocks, bonds, commodities, or cryptocurrencies. The key difference between ETFs and mutual funds is that ETFs can be bought and sold just like stocks while mutual funds can only be purchased at the end of the trading day.

N

NAV
Net Asset Value is the current dollar value of a single ETF/Mutual Fund share, also known as the share price. The fund’s NAV is calculated daily by taking the fund’s total assets, subtracting liabilities, and dividing by the number of outstanding shares.
NFTs (Non-Fungible Tokens)
A special kind of crypto asset in which each token is unique and one of a kind. This is different to fungible assets such as Bitcoin and fiat currencies like the Dollar bills where multiple numbers of units can exist and are all worth the same amount. Because every NFT is unique, they can be used to authenticate ownership of digital assets such as a piece of art, recordings, and virtual real estate or pets.
Node
Within the blockchain network, the nodes are computers that connect to the network and have an updated copy of the blockchain.
Non-custodial
A decentralized type-of-wallet where the users own its private keys.

O

Off-Chain
Refers to transactions occurring outside the blockchain and are executed instantly.
Offline Staking
Staking without needing to be connected to the blockchain.
Open-End Fund
An investment fund that has variable capital and can continually issue new units. Compare with Closed-End Funds.
Option
Financial instruments that refer to a contract offering the buyer the right to buy or sell underlying assets at a specified price and time.
Oracles
In the context of cryptocurrencies, they refer to services which provide real-world data to blockchains and smart contracts.
Order Book
An electronic list of all buy and sell orders in an exchange.
OTC (Over the Counter)
Refers to the process that cryptocurrencies are being traded outside the exchange and it is done directly between two parties.

P

Passive Management
A style of investment management that seeks to attain a return equal to an underlying index or benchmark. Compare with active management.
Peer to Peer
A communication protocol that does not require a central hub.
Permissioned Blockchain
A private blockchain where the nodes and/or the users amust be previously authorized by a central entity.
PoA (Proof-of-Authority)
A consensus algorithm that assigns a block validation queue based on identity and reputation.
PoB (Proof-of-Burn)
A consensus algorithm that assigns block validation queue based on the coins/token burned by the validator.
Portfolio
A collection of financial assets. In the investment management business, the composition of a fund's assets.
PoS (Proof-of-Stake)
A consensus algorithm that assigns block validation queue based on the coins / token locked in by the validator.
PPLNS (Pay-Per-Last N Shares)
PPLNS systems only pays miners after the pool has discovered the block. This means miners will only be compensated once the block has been discovered.
PPS (Pay-per-Share)
Investors are compensated for each valid share they contribute. Each share is worth a set amount of cryptocurrency that may be mined.
Pre-Sale
A typically exclusive token sale event preceding a public ICO (Initial Coin Offering).
Private Coins
Cryptocurrencies that are designed with a focus on transaction anonymity and user privacy.
Private Keys
The alphanumeric string which allows accessing the cryptocurrency stored in an address. They have a similar function to password.
Proof-of-Stake
Most famously associated with the Ethereum blockchain, it’s a system for mining cryptocurrencies requiring users to stake their coins as collateral to become a verifier on the network.
Public Blockchain
An open sourced blockchain where participation is public and permissionless.
Public Keys
Most commonly known as the cryptocurrency address.
Pump and Dump
A coordinated effort to inflate the price of an asset with the aim of selling before it falls in value. Cryptocurrencies with smaller market capitalizations can be vulnerable to pump and dump scenarios.

R

RoI
Return on Investment - The ratio between net profit and cost of investing.

S

Satoshi
A unit measure for the smallest divisible unit of a Bitcoin. 1 Bitcoin is equal to 100 million Satoshi.
SEC (Securities and Exchange Commission)
An independent agency of the US Federal government which oversees federal security laws, the proposing of securities rules, and the regulating of the securities industry.
SegWit (Segregated Witness)
A soft fork implementation to change the Bitcoin protocol’s transaction format to address Bitcoin’s scalability issues whilst introducing new features.
Sell Wall
Irregularly large sell order(s) at a single price point that reflects as a ‘wall’ in the order book.
Share
A unit of ownership in an investment, such as a share of a stock, mutual fund or ETF.
Sharpe Ratio
A risk-adjusted measure of reward per unit of risk. The higher the ratio, the better.
Side Chain
A separate blockchain ledger that runs parallel with the primary blockchain.
Smart Contract
Self-executing contracts on the blockchain without needing human executors or notary.
Smart Contracts
Like any contract, they establish the terms of an agreement. However, in contrast to a traditional contract, they are a code or program running on a blockchain that are executed when a set of predetermined conditions are met.
Stablecoin
A cryptocurrency where the price is pegged to fiat currencies or commodities. They are designed to reduce volatility relative to unpegged cryptocurrencies like Bitcoin.
Staking
A process with the objective of growing the earnings of an investor. In staking, investors lock crypto tokens into their wallets, but give permission to a third party such as an exchange to stake their crypto coins on DeFi (Decentralized Finance) projects that offer interest or yield farming to maximise returns.
STO (Security Token Offering)
Refers to a public offering for tokenized digital securities, ie, short security tokens traded on cryptocurrency exchanges.
Stop-Loss Order
Conditional market order to sell at the next available price, executed if the price of an asset falls below a set-upon limit.
Swaps
A derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything.

T

TGE (Token Generation Event)
An event in which new tokens normally on a smart contract platform which are created and distributed to the public.
Token
A blockchain based unit of value which grants holders a certain right to participate in the network.
Token Burn
An event in which tokens are verifiably removed permanently from circulation.
Total Supply
All the tokens and coins that exist in a cryptocurrency network right now, minus any coins that.
TPS (Transactions per Second)
The number of transactions executed per second. For example, if there are 20 transactions of Bitcoin executed in 60 seconds, the TPS would be 0.33.
Trading Volume
The amount of the cryptocurrency that has been traded in the last 24 hours.
Transaction Fee
A payment to the network for performing a transaction to be recorded on the blockchain.
TVL (Total Value Locked)
Represents the number of assets that are currently staked in a protocol or the total quantity of underlying amount of funds that a DeFi (Decentralized Finance) protocol has secured.

U

Utility Coin
They make up the majority of tokens issued in the scope of an ICO (Initial Coin Offering). They are primarily used by companies to raise interest in their products, and for application and value creation in services provided in blockchain ecosystems.

W

Wallet Address
The address in which cryptocurrencies can be stored, sent to and received.
Web3
Decentralized projects that use smart contracts and automate transactions over the internet.
Web3 Wallet
The software that enables interactions with web 3.
Wei
The smallest fraction of an Ether, with each Ether to 1000000000000000000 Wei.
Whales
Investors that are the largest holders of a cryptocurrency. They have the strongest ability to move the market with their trades.
Whitelist
List of approved participants that will be given access to a token sale. For example, ICO, IEO and STO, etc.`
Wrapped Token
A cryptocurrency token pegged to the value of another token or other assets such as commodities.

Y

Yield Farming
Involves putting a cryptocurrency into a DeFi (Decentralized Finance) protocol to collect interest on trading fees.

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